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PCE ahead, Nike slips, Biden falters in debate with Trump - what's moving markets

Published 28/06/2024, 08:46
© Reuters

Investing.com -- U.S. stock futures ticked up on Friday, with investors awaiting the unveiling of an inflation reading closely monitored by the Federal Reserve. The personal consumption expenditures price index is expected to show that price growth cooled in May, potentially bolstering the case for the Fed to slash interest rates in 2024. Elsewhere, Nike (NYSE:NKE) shares tumble after the sportswear group warns that sales will decline in the current quarter, while U.S. President Joe Biden falters in a much-anticipated debate with Donald Trump.

1. Futures point higher

U.S. stock futures pointed broadly higher on Friday, as investors looked ahead to the release of the Federal Reserve's preferred gauge of inflation that could impact how the central bank approaches possible interest rate reductions later this year.

By 03:34 ET (07:34 GMT), the Dow futures contract had edged up by 19 points or 0.1%, S&P 500 futures had inched up by 15 points or 0.3%, and Nasdaq 100 futures had gained 75 points or 0.4%.

The main averages on Wall Street ended trading on Thursday in positive territory, but advances were relatively muted as markets awaited the publication of May's personal consumption expenditures (PCE) price index (see below). The benchmark S&P 500 added 0.1%, the tech-heavy Nasdaq Composite rose by 0.3%, and the blue-chip Dow Jones Industrial Average increased by 0.1%.

2. PCE ahead

The PCE data on Friday is expected to show that inflation in the U.S. decelerated in May compared to the prior month, potentially providing more impetus for the Fed to potentially roll out rate cuts in 2024.

Headline PCE is seen slowing to 0.0% on a monthly basis, down from a rise of 0.3% in April. In the 12 months to May, economists project that the figure also cooled to 2.6% from 2.7%.

Overall, so-called "core" data, which strips out volatile items like food and fuel, is tipped to ease to 0.1% month-on-month and 2.6% year-on-year.

"In our view, both readings would be acceptable for the Fed’s cutting narrative to build further," analysts at ING said in a note to clients.

3. Nike shares slump after group flags sales decline

Shares in Nike shed more than 12% of their value in extended hours trading after the sports apparel company told investors that revenue is expected to fall by 10% in the current quarter.

Sales in the ongoing fiscal year are also seen decreasing by a percentage in the mid-single digits.

In a post earnings call, Chief Financial Officer Matthew Friend said the guidance reflects "more aggressive actions" in managing its classic footwear products, "continuing challenges" in its digital business, and "muted" wholesale order books. The outlook in its key Chinese operations, which accounts for more than 14% of its worldwide sales, is "softer" as well, Friend noted.

"[T]his quarter, we have been navigating several headwinds, which we now expect to have a more pronounced impact on fiscal [20]25," Friend said. "Although the next few quarters will be challenging, we are confident that we are repositioning Nike to be more competitive with a more balanced portfolio to drive sustainable, profitable long-term growth."

Fourth-quarter net revenue dropped by 17% to $12.61 billion, falling short of Wall Street expectations of $12.84 billion, according to LSEG data cited by Reuters. Sales of Nike's Converse shoe dipped by 18% in particular. However, earnings per share of $0.99 topped projections.

4. Biden falters in hot-tempered debate with Trump

U.S. Democratic President Joe Biden appeared to struggle through much of Thursday night's highly-anticipated 90-minute debate with Republican challenger Donald Trump, stumbling through questions put to him by the event's moderators.

The televised debate on CNN was billed as a showdown between two candidates who face major questions over both their age -- Biden is 81 years old and Trump is 78 -- and their temperments.

Biden's performance was marked by a hoarse voice and a series of long pauses, which largely overshadowed his attacks on Trump's recent criminal conviction and his failure to accept democratic norms. Trump, meanwhile, took aim at Biden's record on the economy and foreign policy.

In the wake of the event, media reports suggested that Democrats were becoming increasingly concerned about Biden's ability to carry out a successful campaign ahead of November's presidential election.

5. Crude on pace for strong weekly gains

Crude prices rose Friday, putting them on course for their third consecutive winning week, as fears of supply disruptions in Russia and the Middle East largely offset concerns over slowing demand.

By 03:31 ET, the U.S. crude futures (WTI) traded 0.8% higher at $82.36 per barrel, while the Brent contract climbed 0.7% to $85.84 a barrel. Brent and WTI futures have gained nearly 2% so far this week, with both benchmarks also on track for gains of around 6% in June.

Fears of a wider war between Israel and Lebanon’s Hezbollah kept markets on edge over disruptions in crude supplies, while attacks by Ukraine on major Russian fuel refineries also pointed to potential disruptions in oil supplies from Moscow.

The geopolitical conflicts saw traders attach a higher risk premium to oil prices. This countered a jump in U.S. crude oil stocks, which ramped up worries that American fuel demand was cooling as the world's biggest oil consumer grapples with sticky inflation and high interest rates.

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